The Context of the organization is a newly added requirement in Clause 4 of ISO 9001:2015, which requires the organization to evaluate itself and its context. To properly perform this evaluation, there is a lot to consider: you must define the culture of the company, objectives and goals that must be outlined, the complexity of products, the size of the company and its customers, the flow of processes and information, identifying risks, and recognizing opportunities regarding the context of the organization.
Clause 4 states that the organization must consider both the internal and external issues that may possibly impact its objectives, strategies, and the planning of the QMS.
How do I do it?
Building from the scope of your Quality Management System, consider the following to determine the context of the organization:
Once the internal and external issues have been identified and approached with thorough consideration, the organization can identify the needs of internal and external parties, which simply means determining whose opinion your organization needs to be in tune to.
The parties in discussion may include customers, end users, regulators, suppliers, partners, owners and shareholders, and even society as a whole. Taking their perspectives into consideration will aid you in implementing efficient and effective practices that meet their needs. Additionally, they can provide feedback to help you identify what needs to be improved within your company.
Next, begin formalizing and documenting the context of the organization. This is often done so on a completely new document that the certification body will want to see. You could (and should) also include this information in your existing Quality Manual (even though the standard “doesn’t require” a Quality Manual, we HIGHLY recommend it).
Not just a one-time exercise
It is necessary for management to implement a process to monitor and review the internal and external issues and context periodically moving forward.
A simple tool to use for external analysis is called a ‘PESTLE’ analysis. PESTLE refers to the Political, Economical, Social, Technological, Legal, and Environmental factors that need to be evaluated regularly. Schedule this in conjunction with existing management reviews to ensure it becomes part of your management routine.
Political - Political factors refer to the degree of government intervention in the economy. The legal and regulatory factors include tax policies, consumer protection laws, employment laws, labor laws, environmental regulations, and trade restrictions.
Economical - Economical factors include the inflation rate, exchange rate, unemployment rate, and other growth indicators like interest rates.
Social - Social factors include different cultural aspects of society and its demographics. This is what forms the macro-environment of an organization. This can ultimately include career attributes, population growth rates, health consciousness and safety awareness, and age distribution.
Technological - Due to the constant evolution of technology, consumers are becoming very tech-savvy and have a high demand for organizations to adapt to new and emerging technology at a rapid pace. Technological factors include new changes, R&D activity, automation, and innovation.
Legal - There are specific laws than can potentially affect the business environment in each country, while there are certain policies an organization can maintain for themselves. This may include consumer laws and safety standards.
Environmental – These include influences from your business environment, such as tourism, climate, weather, geographical location, environmental offsets, etc.
Having an understanding of the PESTLE Analysis will develop a stronger foundation within management on how to adapt to external factors that may determine the future changes of your organization. Grasping the ground realities of the environment you are operating in is essential to operating effectively.
Don’t Make it Too Hard!
Clarifying the context of your organization should not be a monumental task. Simply talk through some of the tools mentioned in this blog and formulate your written context. After all, you are just trying to develop a written explanation of why your organization exists, what you provide, and who you serve – all of this should be pretty easy to identify.
Thinking of Outsourcing your Internal Audits?
Christopher M. Spranger, MBA, ASQ MBB
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